Supermarket Chain Wins Appeal in its Federal Lawsuit Seeking to Enforce Exclusivity Restrictions in its Leases

Whether you are a commercial tenant or landlord, the chances are that you have certain things that your business offers that provide you with a degree of leverage in your commercial lease negotiations. With that leverage, you may be able to negotiate certain advantageous lease terms. The key to getting the most, then, from your commercial lease is not simply negotiating the most favorable lease terms possible, but then also litigating when necessary to enforce those provisions. An experienced Florida landlord-tenant attorney can help you in accomplishing these necessary goals.

One federal case recently resolved by the 11th Circuit Court of Appeals was an example of needing to do both. A major supermarket chain had negotiated certain exclusivity provisions in many of its lease agreements. These terms barred other tenants within the shopping center (and within a certain proximity) from selling groceries.

At some point, the supermarket discovered that there were stores selling groceries that were in violation of the lease terms. To enforce its rights, the supermarket sued. However, instead of suing the landlords, the supermarket sued the other stores — two “dollar” store chains and one discount overstock retailer – for the violations. The supermarket’s argument in its lawsuit was that the exclusivity provisions in its leases were restrictive covenants that the other tenants violated when they moved in and started selling groceries.

The outcome in the case turned on something called the “law of the case.” In this litigation, the trial court had used a very restrictive definition of the key terms “groceries” and “sales area,” which greatly reduced the number of stores against which the supermarket could pursue the injunction it desired. The supermarket appealed, and the appeals court ruled in its favor, concluding that the lower court should have followed a 2002 Florida Court of Appeal case and employed the common dictionary definitions of “groceries” and “sales area,” which were broader than what the District Court used in this case.

When the case went back to the trial court, however, the lower court again used restrictive definitions of “groceries” and “sales area,” which again left the supermarket able to pursue its case against only a very few stores. Again it appealed, and again it won. The appeals court’s first decision gave the lower court a mandate. The legal doctrine of the “law of the case” says that, once a higher court gives a lower court a mandate, the lower court is then barred from revisiting that issue once the case is remanded back to it.

What that meant for the supermarket’s case was that it had won a clear victory in its first appeal, and the issue of which set of definitions to use for “groceries” and “sales area” was settled by that appellate decision. The supermarket was entitled to the benefit of that ruling, and the lower court was not permitted to revisit the question and rule in favor of the dollar and discount stores on the topic.

This meant that the supermarket was entitled to the broader definition that would permit it to seek injunctive relief against a larger number of the defendants.

When dealing with leased commercial properties, there are numerous essential steps, including everything from lease negotiation to litigation, to enforce the terms that you negotiated. The diligent South Florida landlord-tenant litigation attorneys at Stok Folk + Kon are here to help you and your business with your commercial leasing needs at every step along the way.

Contact us online or by calling (305) 935-4440 to schedule your consultation and find out how this firm can help you protect your interests.